Investment

Al Anwar Holding Company is an investment holding company originally formed in 1994 for investments in industrial ventures such as power, oil and gas, glass, paints and certain other industrials. The company undertakes private equity investments with a primary focus on the GCC region. Al Anwar has historically targeted investments in growing small and medium-sized businesses. Through local and international alliances, the company tries to groom and grow these investments into large companies. Since its founding, Al Anwar has diversified away from its traditional focus on the industrial sectors into the financial sector, by investing in leasing and insurance companies. Its investment portfolio comprises subsidiaries, associates and marketable trading securities.

Falcon Insurance Company, a subsidiary in which Al Anwar has a 51% stake, is engaged in insurance activities in Oman. A royal decree was recently passed requiring all insurance companies in Oman to list on the Muscat Securities Market within three years, and at the same time raise their minimum capital to OR10m ($25.9m). According to a Standard & Poor’s report, this should be good for unlisted insurers as it will improve their access to funds, strengthen their capital and make them more transparent. As such, Al Anwar could benefit from listing its subsidiary, Falcon Insurance Company, which is currently registered as an SAOC. Al Anwar also has two other subsidiaries – Al Anwar International Investments, its investment arm, and Al Anwar Development, which is fully owned by the company and has been inactive of late.

Among its list of associates, Al Anwar holds 36% of Al Maha Ceramics (pre-listing); 31% of Taageer Finance Company; and 27% of Voltamp Energy. The initial public offering (IPO) of Al Maha Ceramics is expected to be a major event for Al Anwar. Founded in 2006 in Sohar industrial area, it is one of the largest ceramic tile producing companies in Oman. The company has managed to grow its sales turnover and profit significantly over time and is currently operating at full capacity, looking to improve its product mix through higher value-added products.

End demand for ceramic tiles in the region and beyond remains robust; however, there is a risk that Al Maha Ceramics may not produce at full capacity if the natural gas supply from the government is interrupted. Management is trying to mitigate this risk by asking the government to increase the gas quota and is also looking at third-party sources to supplement its feedstock mix. After the IPO, Al Anwar’s stake in Maha Ceramics will decrease from 36% to 21%, with Al Anwar expected to sell 7.4m shares to the public and raise OR2.9m ($7.51m) in the process.

Taageer Finance Company has been a significant contributor to the group-level income of Al Anwar. In July 2014 Al Anwar agreed to sell the entirety of its stake in Taageer at a price of OR0.162 ($0.42) per share. Taageer has posted good financial results of late and is expected to perform well in the near to medium term as the leasing sector in Oman continues to grow.

Another associate of Al Anwar, Voltamp Energy is a manufacturer of power transformers. Voltamp’s sales and net profit dropped in the first half of 2014, as the sector witnessed stiff competition from both local and foreign manufacturers.

Apart from its subsidiaries and associates, the company also had a land investment, which it recently had to sell at a loss, as the carrying value of the land exceeded the sales price. Going forward, Al Anwar’s management is planning to continue its very successful buy-and-build strategy, which creates both value and sources of sustainable income.

The company’s share price shot up by 183% in 2013 before declining by 15% in the first half of 2014. Al Anwar has reported strong financial results recently, which have been driven by income from its subsidiaries and associates. With Oman’s expansionary fiscal policies and economic diversification programme, Al Anwar will continue to find significant opportunities to develop companies and reward its shareholders.